Image : An artist’s impression of Thornhill Park, which is being developed by Welsh Group.
Australian Financial Review
Feb 22 2017
by Larry Schlesinger
Former Essendon football star and BRW Young Rich Lister Andrew Welsh has secured a $105 million finance facility from Hong Kong-based hedge fund OCP Asia to fund the development of a new suburb in Melbourne’s west.
Mr Welsh and his father, Graham, run Welsh Group, which is developing Thornhill Park, a 1300-lot house-and-land estate at Rockbank.
It’s the second significant funding deal provided by OCP to major Australian developers in less than a month after national group Metro Property Development secured a $90 million senior loan to fund the construction of an apartment tower in Brisbane.
Mr Welsh said it was difficult for all developers to secure commercial bank funding for greenfield development. “We are pleased to have found a funding partner that understands the ebbs and flows of development,” he told the Australian Financial Review.
OCP partner Dan Simmons said its Australian property lending business was the busiest in three years. The latest deal takes total East Coast development funding to more than $700 million and more than $1.1 billion when including commercial projects and hotels. OCP raises most of its money from US pension funds.
While the funding is more expensive, Mr Simmons said OCP was able to provide bigger and more flexible loans more quickly than the commercial banks, which allowed developers to get on with construction. He added that the developers it was was funding were high quality, not distressed groups.
“Developers often find that traditional financing is restrictive and they are pushed into early sales with limited or no infrastructure, which softens pricing and volume,” Mr Simmons said.
Mr Welsh said Welsh Group was exploring further opportunities with the support of OCP. The company has secured more than 630 lot sales to date at Thornhill Park, worth $130 million